Mexico | Banxico keeps cutting steadily; signals more to come

Summary

The Board noted that “economic activity exhibited sluggishness at the beginning of the third quarter of 2025,” in line with the July’s IGAE print released yesterday, which showed a broad-based 0.9% m/m contraction across all major sectors.

Key points

• Key points:
• Banxico delivered a widely anticipated 25bp rate cut to 7.50%, while signaling further room to ease amid the sluggishness of economic activity.
• Banxico’s modest inflation forecasts revisions signal a positive outlook, likely underpinned by a widening negative output gap.
• By keeping its forward guidance unchanged, Banxico signals its intent to keep easing, with rates still moderately restrictive after today’s cut.
• We maintain our view that the Board will deliver two more 25bp rate cuts this year, in November and December, bringing the policy rate to 7.0% by year-end.
• We think further easing toward at least the midpoint neutral estimate remains warranted in light of the continued weakness of domestic demand.

Geographies

Topics

Tags